ABC Poultry Co. makes a smoked turkey that is very popular on Thanksgiving Day. Thus, peak sales occur in November of each year. This is shown on the company’s sales budget for the fourth quarter given below: Oct. Nov. Dec. Total Budgeted Sales (all on account ) $150,000 $250,000 $100,000 $500,000 From past experience, the company has learned that 30% of a month’s sales are collected in the month of sale, and 50% are collected in the month following the sale. The remaining 20% are collected in the second month following sale. Bad debts are negligible and can be ignored. August sales totaled $110,000, and September sales totaled $130,000. Required: Prepare a schedule of expected cash collections from sales by month and in total for the fourth quarter What is the accounts receivable balance on Deec.31?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
ABC Poultry Co. makes a smoked turkey that is very popular on Thanksgiving Day. Thus, peak sales occur in November of each year. This is shown on the company’s sales budget for the fourth quarter given below:
Oct. Nov. Dec. Total
Budgeted Sales (all on account ) $150,000 $250,000 $100,000 $500,000
From past experience, the company has learned that 30% of a month’s sales are collected in the month of sale, and 50% are collected in the month following the sale. The remaining 20% are collected in the second month following sale.
Required:
- Prepare a schedule of expected cash collections from sales by month and in total for the fourth quarter
- What is the
accounts receivable balance on Deec.31?
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